The U.S. Department of Energy has taken equity stakes in the Canadian company Lithium Americas and its Nevada mining joint venture with General Motors. This action is part of a renegotiation of a federal loan.
Under the new terms, the U.S. government will acquire a 5% equity ownership in Lithium Americas and a 5% ownership in the Lithium Americas-GM joint venture. These equity stakes will be obtained through no-cost warrants. Warrants are financial instruments that give the government the right to purchase shares at a set price.
The new terms resulted from a renegotiation with the DOE’s Loan Programs Office concerning a 2.26 billion dollar loan that was originally awarded to Lithium Americas under the Biden Administration. Following the announcement, shares of Lithium Americas spiked 34% in after-hours trading.
The DOE stated the equity stakes will serve as additional collateral on the loan, which helps to reduce repayment risk for taxpayers. Lithium is a key chemical element used in the batteries of electric vehicles and smartphones.
U.S. Energy Secretary Chris Wright said in a press release that despite having some of the largest deposits, the United States produces less than 1% of the global supply of lithium. He stated that thanks to President Trump’s leadership, American lithium production is going to skyrocket. He added that the announcement helps reduce dependence on foreign adversaries for critical minerals by strengthening domestic supply chains and ensures better stewardship of American taxpayer dollars.
The Tuesday announcement is the latest action by the Trump administration to take ownership stakes in companies. The administration has previously announced plans to take a 10% stake in Intel and MP Materials, which operates a rare earth minerals mine in the United States.
Lithium Americas is developing the Thacker Pass mine in Nevada. The mine is expected to produce enough lithium to make as many as 800,000 electric vehicles per year in its first phase. President Trump approved the permit for the project in January 2021, at the end of his first term.
GM bought a 38% stake in Lithium Americas last year for 625 million dollars. This purchase gave the automaker the right to buy the entirety of the first phase of production. It also secured the right to purchase lithium from the mine for 20 years during the second phase. In total, that would be enough lithium for 1.6 million electric vehicles over the next two decades.